Friday, June 10, 2016

DOL Rule concerning Proprietary Products

As I mentioned in the previous post, if you offer proprietary products, the new Department of Labor rules are about to rock your world, and not in a good way. As the DOL explains, "Proprietary
products are products which the firm or its affiliate manage, issue, or
sponsor, and an adviser may face increased conflicts of interest with respect
to advice on such products due to the benefit to the firm. Advisers/financial
institutions offering a limited set of proprietary products must fully disclose
that they are offering only a restricted menu of products, and also disclose
the associated conflicts of interest, adopt measures to protect investors from
those conflicts, and insulate the adviser from conflicts when making
recommendations from the restricted menu. In addition, advisers that
recommend a limited set of products must consider what is in the retirement
investor's best interest, and, if it is a product that they do not offer, they
cannot recommend a product from their limited menu." That means it's going to be very difficult to sell an equity-indexed annuity to a retirement investor. And, if the broker-dealer sells mutual funds that their related investment advisory arm manage, or if they sponsor the funds as wholesalers, they are going to have to rethink that whole business model from top to bottom. This is big stuff here, people. Huge, in fact. Get Help on your Series 7 Exam